Dr. Lee Ville of New Bob Group tells you that it’s still possible to get a new home although the market is falling fast.
Buying a home in the current economy sounds like a joke. Our currency is dropping by the seconds but property prices are rising faster than houses are being built. We have all been questioning if this bubble will burst in the near future. Can we even afford a 500 sq ft. studio apartment anymore in 2016? We spoke Dr. Lee Villle, founder and owner of New Bob Group, a property developer, about the possibilities of buying a new home in this horrifying economy. Let’s just say, we can all take a breather after listening to his advice.
1. Work Out Your Budget
Unless you want a private elevator, not all homes come with a seven-digit price tag. “Work out your affordability, figure out your existing expenses, and estimate your potential loan and associate costs. Look realistically at your income if it can cover your monthly repayments,” said Dr Lee Ville.
2. Stay Away From the City
Getting a home in the city centre and urban areas like Bangsar and Mont Kiara will definitely burn a hole in your pocket. Search for properties in the suburbs instead; approximately 10 to 15 minutes away from the said areas. You’d be surprised by the price differences. Search for the latest property prices around the area at National Property Information Centre (NAPIC), advises Dr Ville.
3. Save Up for a Down Payment
You might be wondering why property prices aren’t dropping since our currency is practically being hosed down the sewage. Limited land in urban areas, rises in compliance and construction costs, and GST implementation are why property prices are standing strong. So, try cooking your meals at home, limit your visits to Zouk and save at least 1/3 of your monthly income, advises Dr Ville, and you’ll be eligible for a down payment in two years time.
4. Consult with the Experts
Find out loan processes from your parents and friends who have successfully bought properties. Talk to a banker for advice on loans and repayments before placing a down payment. Also, refer to a property agent who is familiar with the area you’re interested in. “Find out if the house is worth the price by comparing it to other properties around the vicinity,” says Dr Ville, who also says that top developers usually offers certain premiums in their projects due to better branding. “The units will be priced slightly higher compared to a less branded developer. At the end of the day, you might want to be more concerned about who can better deliver it.”
5. Fees and Charges
However, there is no way you can run away from legal fees, stamp duties and other hefty loan charges that banks throw at you, but do look out for good rebates offered by developers. “Developers usually give various forms of rebates, making it easier for your first down payment,” says Dr Ville. Currently, the maximum market rate is at 4.4%.
It’s still possible for you to purchase your first home with the current economy. Do more research on your end and consult the experts to get the perfect home that you’d yearn to go back to every night.
1. Stamp duty for transfer of ownership title (also known as memorandum of transfer or MOT) = 1% for the first RM100,000; 2% on the next RM400,000, and 3% on the subsequent amount.
2. Sale & Purchase Agreement (SPA) legal fees = 1% for first RM150,000 and 0.7% of remaining value of property within RM1 million
3. Stamping for SPA = RM10
4. SPA legal disbursement fee = Between RM 300 – RM 500 (depending on the developer and bank)
5. Loan facility agreement legal fees = 1% for first RM150,000 and 0.7% of remaining value of loan within RM1 million
6. Stamp duty for loan = 0.5% of loan amount
7. Loan Facility Agreement legal disbursement fee = Based on a RM400,000 property – First RM150k x 1% = RM1500 + Next RM250,000 x 0.7% = RM1750 = RM2250
8. Mortgage Reducing Term Insurance (ie. think of it as a life insurance for your home loan) = RM1,000 or more (some banks waive this amount)
9. Government Tax on Agreements = 6% of total lawyer fees
10. Bank processing fee for loan = RM200